_.__ - 

Mr. Chas. M. Rogers, 

Chairman, Board of Trustees 

Teacher Retirement System of Texas 

Austin, Texas 

Opinion No. (WW-24) 

Re: Whether funds of the Teacher 

Retirement System of Texas 

may be invested in Corporate 

Dear Sir: Stocks and Bonds. 

Your request, dated February 11, 1957, presents in 

substance the following question: 

'May the Board of Trustees of the Teacher 

Retirement System of Texas invest funds of the 

System in corporate stocks and bonds?" 

Section 48a, Article III, of the Constitution of Texas, 

as amended by the Constitutional Amendment adopted at the General 

Election held November 6, 1956, In providing for the investment 

of Retirement System funds, reads in part as follows: 

"Section 48a. . . . 

"The Legislature may authorize all moneys 

coming into such fund to be invested . . .; 

or in such other securities as are now or hereafter may be permitted by law as investments 

for the Permanent University Fund or for t\e 

Permanent School Fund of this State; . . . 

Section 13, of Article 2922-1, Vernon's Civil Statutes, 

provides in part: 

'Sec. 13. 1. . . . All retirement funds 

and monies, including those received into 

the Treasury of the State of Texas as deposits and contributions of teachers and 

employers, may be invested only . . .; and 
- -___ 

Mr. Chas. M. Rogers, page 2. (WI?-24) 

in securities in which the State Permanent 

School Fund of Texas or the Permanent University Fund of the University of Texas may be 

Invested under present or hereafter enacted 

laws." 

From a reading of the foregoing constitutional and 

statutory provisions, It will be seen that all retirement funds, 

therein specified, may be invested by the Board of Trustees of 

the Teacher Retirement System in certain designated bonds and 

other evidences of indebtedness "and in securities In which the 

State Permanent School Fund of Texas or the Permanent University 

Fund of the University of Texas may be invested under present or 

hereinafter enacted laws." (Emphasis added) 

We find no authority for funds of the State Permanent 

School Fund to be invested in corporate bonds and stocks. Section lla of Article VII, of the State Constitution, adopted at 

the General Election held November 6, 1956, provides for the 

investment of the Permanent University Fund and reads, in part, 

as follows: 

"Section lla. In addition to the bonds now 

enumerated in Section 11 of Article VII of the 

Constitution of the State of Texas, the Permanent 

University Fund may be invested in . . . such corporation bonds, preferred stocks and common stocks 

as the Board of Regents of The University of Texas 

may deem to be proper Investments for said funds; 

and the interest and dividends accruing from the 

securities listed in Section 11 and Section lla, 

except the portion thereof which is appropriated 

by the operation of Section 18 of Article VII for 

the payment of principal and interest on bonds or 

notes issued thereunder, shall be subject to appropriation by the Legislature to accomplish the purposes declared in Section 10 of Article VII of 

this Constitution. In making each and all of such 

investments said Board of Regents shall exercise 

the judgment and care under the circumstances then 

prevailing which men of ordinary prudence, discretion, and intelligence exercise in the management 

of theirown affairs not in regard to speculation 

but In regard to the permanent disposition of their 

funds, considering the probable income therefrom 

as well as the probable safety of their capital; 

provided, however, that not more than fifty per 

cent (50%) of said fund shall be invested at any 
Mr. Chas. M. Rogers, page 3. (Ww-24) 

given time in corporate stocks and bonds, nor 

shall more than one per cent (1%) of said fund 

be invested in securities issued by any one (I) 

car oration, 

(5J 

nor shall more than five 

P 

er cent 

of the voting stock of any one (1 corporation be owned; and provided, further, that stocks 

eligible for purchase shall be restricted to stocks 

of companies incorporated within the United States 

which have paid dividends for ten (10) consecutive 

years or longer Immediately prior to the date of 

purchase and which, except for bank stocks and 

insurance stocks, are listed upon an exchange 

registered with the Securities and Exchange Commission or its successors. . . .II 

The provisions of Section lla, for purposes of this 

opinion, are self-explanatory. 

We conclude that the Board of Trustees of the Teacher 

Retirement System may Invest funds of the System in those corporate stocks and bonds in which funds of the Permanent University Fund of the University of Texas may be invested, pursuant 

to the provisions of Section lla of Article III of the Constltution of the State of Texas, and subject to the applicable condltions and limitations set forth therein. 

SUMMARY 

The Board of Trustees of the Teacher Retirement System may invest funds of the 

System in those corporate stocks and bonds 

%n which funds of the Permanent University 

Fund of the University of Texas may be invested, pursuant to the provisions of Section lla of Article III of the Constitution 

of the State of Texas, and subject to the 

applicable conditions and limitations set 

forth therein. 

Very truly yours, 

LP:F:st 

APPROVED: 

OPINION COMMITTEE 

H. Grady Chandler 

Chairman 

WILL WILSON 

Attorney General of Texas 

-LEdRARD PASSMORE 

Assistant